The subjects intersected this morning in something called the Barclays ETN+FI Enhanced Europe 50 exchange-traded note (FEEU). The result was ugly, but entirely preventable.

This exchange-traded note of European stocks, which holds $1.1 billion in assets, plunged close to 15% around 9:45 a.m., just as a 123-share trade, worth about $16,000, hit the tape. You might ask how a $16,000 trade can torpedo a $1.1 billion ETN.

The answer has two components: (1) This is a “bespoke” ETN, and tailor-made exchange-traded products often have extremely little day-to-day trading volume. (2) A trader appears to have sent an indiscriminate market order into this ETN’s trading vacuum, as if this was a highly liquid fund such as SPDR S&P 500 ETF (SPY).

As the accompanying graph shows, the price recovered about a half-hour later with another small trade.

The Barclays product was custom-built for Fisher Investments, which owned 96% of the shares at last disclosure, according to FactSet Research Systems.

So, investor beware: Just because an ETF or similar product has a pile of money in it doesn’t mean you can expect a good result firing off market orders. Use limit orders to avoid a big penalty.

About Focus on Funds

As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.